Tesla Powerwall: Has The Battery Revolution Begun?

Tesla Powerwall: Has the Battery Revolution begun?

Tesla has recently announced their home battery which can store electricity from both solar panels and the grid – the Tesla Powerwall. While this news has generated a lot of excitement from the general public who are excited to break away from the grid, they may be curious to know how the Powerwall differs from other batteries, and whether the Powerwall really deserves the hype that it has generated.

Batteries are ideal compliments to a Solar Photovoltaic (PV) system, as solar generates the most electricity during the middle of the day, whilst households use the majority of their energy during the early morning and night. Batteries can be used to store energy for later times when it is required. In addition, batteries can ensure that the home has available power in the event of an outage, or when weather conditions are unfavourable for solar. The Australian market is highly suited for the introduction of batteries due to the high price that we pay for electricity from the grid, and the comically low feed-in tariff (the money generated by selling energy back into the grid) of only 5.1 cents per kWh (AGL NSW). Batteries are predicted to increase in popularity significantly over the coming years due to the economic benefits that they can generate when paired with a Solar PV system.

Reposit Power offers a product which allows consumers to reduce their electricity demand charges, while also allowing consumers to sell to an energy supplier at a significantly higher rate than is offered by their retailer.

Whilst undeniably successful, Tesla Motors is only a young company, having been producing electric vehicles since 2008. The Tesla Energy division of the company is even more recent, having been established earlier this year, and announcing their home battery, the Powerwall shortly after. Due to the hype that they have generated, the Powerwall has already sold out until mid-2016 in Australia. Many people are excited by this product and see it as a paradigm shift towards self-sustainability. One of the lingering questions is how Tesla, a young company, is able to mass produce batteries that are of such a high quality.

There are numerous other battery manufacturers with a wealth of experience. These include LG Chem, Samsung, AU Optronics, Panasonic, Sunverge and Giant Power. These manufacturers have been operating for many years and have vast experience in a range of different technologies.

The main barriers for entry in the Australian market (especially residential) surround the funding mechanisms. New home builders are able to attach a Solar and Battery hybrid system onto their mortgage rates which creates a very alluring financial case, however, residential retro-fit is still a challenge, with a number of organisations offering Power Purchase Agreements (PPA’s) to attempt to facilitate this process. In the commercial, retail and industrial sectors existing purchasing power or available funding from the Clean Energy Finance Corporation’s (CEFC) banking partners enable very attractive financing rates.

Comparison between Conventional Batteries and the Tesla Powerwall

Clean Energy Corporation Australia has undertaken some analysis of the Tesla Powerwall in order to assess whether it is superior to batteries that are currently available on the market. There are a lack of specific details available from Tesla which is concerning. Whilst the Powerwall has an appealing design, it is much more important for consumers to determine whether the product is worth the money – and the wait.

The Powerwall will be available in two sizes – 7kw and 10kw. The 7kw model is similar to the batteries that are offered by other manufacturers as it is designed for daily use. However, the 10kw version is designed for use no more than once per week. This battery is designed to be a backup power supply – not something that is to be used daily. This means that the 7kw battery is suitable for storing electricity in a hybrid situation where the consumer wants to capture and store solar energy in the daytime, and use the energy at night when they’re at home. The 10kw pack cannot be used for this purpose – it is designed solely for backup power.

The lack of details have left consumers in the dark when it comes to the depth of discharge (DOD). As a rule, large battery banks, even lithium-ion, have a discharge limit point for optimal performance. If the consumer exceeds this limit, not only will the guaranteed life of the battery shorten significantly, but the consumer will likely void their warranties and performance guarantees.

It is important for consumers to distinguish between battery capacity and usable capacity. Battery capacity refers to the total storage capacity of the battery. For Tesla’s daily storage solution, the battery capacity is 7kW. As not all of this capacity can be utilised, consumers should focus on the usable capacity. This is calculated by multiplying the battery capacity by the depth of discharge.
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Unfortunately Tesla has not provided the DOD for their batteries. If we estimate the recommended DOD as 50%, then the 7kW battery can only deliver 3.5kW of power each day.

Exact prices for the Powerwall have not been provided. At this stage, the price of the Powerwall is estimated to cost around $5,500 – $6,000, and the Powerwall is only guaranteed for 10 years.

Therefore, purchasing one of these batteries will provide a guaranteed 3.5kWh daily capacity for 10 years, costing the consumer approximately $6,000. If the battery discharges 3.5kWh every day, assuming an electricity cost of 28c per kWh, the consumer will save $357.7 per year.

Clean Energy Corporation Australia currently provides Giant Power battery banks with our hybrid systems. These are gel solar batteries, and have a recommended DOD of 40%.

These batteries have a total capacity of 9.6kWh, and a usable capacity of 3.84kWh. They are guaranteed for 13 years, and cost approximately $4,900 for the complete battery system. In some instances, cabinet storage is required in order to ensure adequate ventilation.

Purchasing one of the Giant Power batteries will provide a guaranteed 3.84kW daily capacity for 13 years, costing the consumer $4,900. If the battery discharges 3.84kWh every day, assuming an electricity cost of 28c per kWh, the consumer will save $392.4 per year. These savings are 9.3% greater than the savings made by the Powerwall, for a significantly lower cost.

Therefore, the consumer can use conventional technology that is proven to be reliable for a lower price than the Tesla Powerwall. In addition, the consumer will make significantly larger long term cost savings whilst enjoying an additional 3 years of warranty.

(Note: The figures we have given for the Powerwall, and for the Giant Power batteries both exclude the cost of an inverter.)

One other point of difference between Tesla’s batteries and other options is that Tesla is expected to offer an alternative to selling their batteries outright. Instead, the consumer may have the option of leasing the battery for seven years. The idea is that batteries are predicted to improve over time, and so the consumer is not stuck with an outdated battery for too long. Whilst this is a valid strategy, it may signify issues with the long term reliability of these battery systems if customers choose to purchase them. We assume that the option to lease the Powerwall will be offered in Australia (as it is offered in the USA), however this has not yet been confirmed by Tesla.

Some customers may think that the Powerwall has a competitive advantage over other batteries as it can be used to directly charge Tesla vehicles. However, the Powerwall does not have a Tesla charging port. Instead, the electricity would have to be converted to AC, before it is reconverted back to DC to charge the car, which would result in significant losses in efficiency. Contrary to what some think, it seems that the Powerwall is not intended to charge Tesla vehicles.

Unfortunately we cannot make more accurate calculations until Tesla releases the full data on the Powerwall, including what the Australian retail price will be. As such, we need to simply make educated assumptions based on the current state of lithium-ion battery technology.

Note: the warranty on the Powerwall expires after 10 years.

Are there any other alternative options?

Another interesting option is the Enphase energy system. This is essentially a modular system that allows you to tailor your battery use to the nearest 1.2kwh. Each module is 1.2kWh so you can add modules to meet your energy requirements exactly, as opposed to the 7kWh battery packs provided by Tesla. As feed-in tariffs are so low, it makes sense to tailor your battery requirements to meet your energy requirements. This is an interesting system, but is estimated to be expensive at $1,150 per kWh. It is currently being trialled in South Australia.

Other alternatives include:

RedFlow – Which intends to release zinc bromide batteries in 2016.

Samsung – Which has released a lithium ion “all-in-one” battery.

Raylite and Ecoult – which provide lead acid batteries.

Aquion – Which sells salt water storage batteries.

Conclusion

It is probably not worth rushing out to buy the Powerwall until it has been proven to be a reliable battery system, and until all of the details about the system are released.

Therefore, maybe the Powerwall is not all that it is made out to be. However, the arrival of Tesla Energy will have a huge effect on the Australian market as other battery manufacturers are forced to become more competitive, and thus must reduce the price of their batteries. Analysis by Bloomberg New Energy Finance suggests that Tesla has brought forward the price of battery storage by 5-7 years. It is always healthy to improve competition in the market as this will result in lower prices from all providers, and hopefully lead to a wider adoption of batteries Australia wide.

**Clean Energy Corporation Australia are a leading Australian Solar PV Design and Installation organisation who work across a range of sectors. Contact us for more information about our services and how we can assist evaluate the appropriateness of Solar PV for your operations.